SUV Redemption Sticker

Green SUV drivers now have TerraPass, a clever eco-capitalism experiment. Launched by a group of Wharton Business School classmates, the startup sells a decal that drivers can slap on their windshields. The sticker price - $79.95 for SUVs, less for greener cars - gets invested in renewable energy projects and credits. The credits are traded through local brokers on the new Chicago Climate Exchange.

TerraPass lets consumers participate in an emissions trading system the US established in 1990. (Give credit to economist Ronald Coase, who won a Nobel Prize for the idea in 1991.) Under the system, industrial operations that spew less than their share of emissions can sell a credit to companies that fail to keep gunk out of the air. In effect, the dirtier factories can pay greener operations to do the work of cutting emissions. The approach has taken off worldwide, spawning a billion-dollar market.

Burning a gallon of gasoline produces about 20 pounds of CO². So the average SUV - which travels 12,000 miles a year - pumps out about 20,000 pounds of greenhouse gases annually. On today's market, TerraPass can scrub that pollution from the environment for less than 80 bucks.

Sounds good. Use a market to find the cheapest way to reduce the green house gases. I would think that this system would require that the nation set a total cap on these emissions. Without that cap I am not sure how this system works. And that cap is crucial in determining the cost of a pound of CO² emissions. But it appears that in this market currently $1 gets you 250 lbs of emissions. I wonder who is doing the CO² reducing to get the money?

And it's not just for big-time polluters. Today, farmers cash in on credits by collecting and processing cow dung, which produces globe-cooking methane. Land-owners earn credits by installing wind farms on their blustery fields, which top off the power grid with carbon-free electricity.

Oh great, so my $80 is going to help some farmer make his cow fart less. Nice. (Don't miss my previous post on Cows and Greenhouse Gases).

So I just checked out the TerraPass site and it appears that they are doing 3 things: purchasing green tags, purchases Exchange Allowances and retires them from the Chicago Climate Exchange (CCX) (a voluntary cap-and-trade system for carbon dioxide), and methane abatement. Full Details

Via Wired Mag